Are offshore firms less conservative in financial reporting? International evidence

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)131-165
Journal / PublicationJournal of International Financial Management and Accounting
Issue number2
Online published30 Oct 2017
Publication statusPublished - Jun 2018


Using a large sample of multinational firms operating in offshore financial centers (offshore firms) from 1998 to 2014, this study investigates the financial reporting implications of economic activities involving offshore financial centers (OFCs). We find that offshore firms have a greater tendency to report less conservatively than non-offshore firms. Moreover, we find that financial reporting is less conservative for firms operating in OFCs with more pronounced OFC attributes than for those with less pronounced OFC attributes. Finally, we also find that firms with their headquarters registered in OFCs (type I offshore firms) tend to adopt less conservative accounting practices than those with subsidiaries operating in OFCs (type II offshore firms). Our findings provide useful insights into how a multinational firm’s operation in OFCs is associated with financial reporting practices.

Research Area(s)

  • conservatism, institutional environment, offshore financial centers, offshore firms, tax avoidance